KUALA LUMPUR, April 1 — Malaysia’s broad money supply (M3) growth and loan growth are expected to remain healthy at 5.5 per cent and 5.2 per cent respectively in 2019, which should keep demand-pull price pressure contained, says RHB Research Institute.
It also maintained its view that Bank Negara Malaysia (BNM) would keep the overnight policy rate (OPR) unchanged at 3.25 per cent for 2019.
RHB Research Institute also pointed out that the possibility of monetary easing has grown substantially, given that major global central banks are increasingly shifting away from a monetary-tightening stance.
“The case for a rate cut by BNM will ultimately hinge on the pace of economic growth, if it softens more than expected,” it said in a research note today.
Malaysia’s M3 growth eased for the second straight month to 6.0 per cent as at end-February from a revised +6.6 per cent in January, dragged down by lower demand for funds from the public and private sectors.
“Nevertheless, demand for funds foreign operations declined at a slower pace during the month, partly mitigating the slowdown.
“Likewise, growth of narrow money (M1) moderated in tandem to 0.5 per cent year-on-year (YoY) after picking up to 1.6 per cent in the previous month amidst a sharp deceleration in the growth of currency in circulation,” it said.
Separately, banking system loan growth trended lower to 5.0 per cent YoY as at end-February – the third consecutive month of deceleration compared with 5.5 per cent in January.
RHB Research Institute noted that both the corporate and household sectors contributed to the slowdown in loan growth.
“As it stands, corporate loan growth moderated to 4.7 per cent YoY during the month against 5.4 per cent in January on lower loans extended to the mining, real estate, agriculture, and utility sectors.
“Nevertheless, continued strength in the demand for loans from the manufacturing, wholesale and retail, construction, financial and business services, and transport and storage sectors provided some mitigation.
Growth of household sector loans slowed further in February to 5.2 per cent YoY against 5.5 per cent in January, marking a sixth straight month of slowdown after peaking in Aug 2018, amid the winding down of residential property loans by the banking sector, as well as a moderation in other consumer loans. — Bernama
